The
small
are becoming larger, and the larger are merging or buying.
(Even the small are merging - too many reasons to do so, not
the least of which are combining and leveraging legal and
compliance staffs.) Yesterday Ocwen announced that it will
acquire Homeward Residential Holdings (formerly known as
American Home) including its servicing and origination
subsidiaries for $588 million cash and $162 million in Ocwen
convertible preferred stock. Ocwen (Newco spelled backward)
has been rapidly expanding its servicing portfolio over the
past few years through acquisitions of HomEq, Saxon, and
Litton. It also made a bid for Aurora servicing rights which
were ultimately sold to NationStar. The most recent addition
of the Homeward mortgage servicing portfolio will make Ocwen
one of the largest servicers in the subprime and Alt-A
sectors. Homeward (think Wilbur Ross) services approximately
$77 billion (422,000 loans), which will be added to Ocwen’s
servicing portfolio of $128 billion residential assets
(811,000 loans). Analysts point out that the servicing
practices of the two institutions are similar in many
respects, although Ocwen tends to be more aggressive about its
modification practices while American Home has shorter
liquidation timelines.
Oceanside Mortgage Company, a direct lender based out
of Forked River, NJ is looking for FHA DE Underwriters to add
to its existing staff. Oceanside is a 100% retail lender,
licensed in 16 states and based in NJ funding approximately
$40 million per month of FHA loans. (The company's website is
www.yourfha.com.)
The company has been in business since 1997 and focuses on FHA
loans. Local candidates are preferred, but remote
candidates will be considered. Please contact Steven
Stone at sstone@yourfha.com
for more information.
And on the other side of the country, Kinecta Federal
Credit Union continues to grow its business and is
holding a Job Fair Open House at their El Segundo,
California Operations Center on Saturday, October 6 from 10:00
am – 2:00 pm. Managers will be on site to interview qualified
candidates for a variety of mortgage sales and operations
positions, including Mortgage Loan Consultants, Account
Managers, a Mortgage Loan Operations Manager, Sr.
Underwriters, Underwriting Assistants, Sr. Funders and
Document Drawer Administrators. They will also be interviewing
for open positions in other departments for Consumer Loan
Officer, Telephone Service Representatives, Member Service
Representatives for Kinecta and Customer Service
Representatives for their Nix Financial Services
organization. Go to www.kinecta.org
homepage and click on the link for the Kinecta Open House Job
Fair for address and details. Also from the kinecta.org home
page, click on the Careers tab to view all open positions with
descriptions. Qualified candidates can apply online if
they are not able to make the Saturday Open House Job Fair.
Yes,
the government has teeth. Yesterday we learned of some
multi-million dollar fines. Remember that recently the FDIC
and the CFPB announced a joint public enforcement action with
an order requiring Discover Bank to refund approximately $200
million to more than 3.5 million consumers and pay a $14
million civil money penalty. This action results from an
investigation started by the FDIC, which the CFPB joined last
year. The joint investigation concerned deceptive
telemarketing and sales tactics used by Discover to mislead
consumers into paying for various credit card “add-on
products” – payment protection, credit score tracking,
identity theft protection, and wallet protection. Any
company, large or small, that thinks they’re above being
fines is dead wrong.
Which leads us to another story on size. Too big to fail? Hah!
The FDIC Summary of Deposits report finds institutions with
$10B or more in assets now control 74.4% of all deposits (as
of Jun 30) vs. 72.4% a year prior. And you can bet those big
banks are earning big bucks, thanks in large part to the
government helping with refinance programs and in keeping
rates low. Here you go: http://www.bloomberg.com/news/2012-10-03/no-joy-on-wall-street-as-biggest-banks-earn-63-billion.html.
Investment
banker Keefe, Bruyette & Woods has been monitoring
the dividend activity of banks. “In 3Q12, bank dividend
actions continued to favor increases, with 44 banks
raising, initiating or reinstating their dividend versus
5 banks cutting, omitting or suspending their dividend. Of
these 44 banks, 25 were TARP recipients that fully repaid
their TARP investment. Since 2011, 147 banks engaged in 264
dividend increases (inclusive of initiations and
reinstatements).”
And
with those earnings comes a note from a broker. “It’s
laughable that the CFPB finds it necessary to ‘control’
compensation for originators while CEO’s and upper management
rake in millions and millions. Do you think the CFPB will
address management or corporate compensation next, I mean
really? Surely limiting earning opportunity for the
little guy only leaves more for the big guys. This
administration talks about opportunity for the little guy, but
their actions (via their legislation) are creating something
completely different from what made this country great.”
Should George Clooney not be allowed to act because he's too
good looking? Michael Phelps be banned from the pool? Should
Freddie Mac not be allowed to provide loans to investors that
are buying homes in foreclosure to rent them out because, as
the FHFA says, Freddie's cheap debt would make it difficult
for banks to compete for the growing number of buyers of
foreclosed homes? What am I missing here? Wouldn't
anything like this help the housing market? Why should A-paper
borrowers have lower interest rates than subprime borrowers?
Should the interest rate Coca Cola pays on its debt be the
same as Chrisman Screen Door Company? The FHFA also worries
Freddie's involvement would deepen the government's
involvement in housing. The question comes up, of course, whether
or not the rate incentives exceed what is allowed by current
regulations. Remember when builders would put a Porsche
in the garage for new homebuyers?
But
properties must be disposed of, and the FHFA announced that
the Cogsville Group, LLC is the second successful
bidder in the agency's owned real estate (REO) pilot
initiative. The group has purchased 94 properties
held by Fannie Mae in Chicago. According to FHFA all
properties were sold near or above market value. Nearly a
month ago it came to light that the first investor group to
purchase through the program was Pacifica Companies, LLC
which bought 699 Fannie Mae properties in Florida. At that
time FHFA said that 541 properties in Atlanta were not awarded
and will be evaluated for disposition through Fannie Mae's
retail sales operation or through future structured
transactions.
And
a story in today’s Wall Street Journal notes that “Blackstone
Group has become the biggest U.S. investor in single-family
rental homes by spending more than $1 billion since the
start of 2012 to acquire more than 6,500 foreclosed houses in
eight metropolitan areas, and the firm also is finalizing a
loan for at least $300 million from Deutsche Bank to support
this business. People involved in the market estimate that
private-equity firms and other investors have raised $6
billion to $8 billion to invest in the sector, as they try to
take advantage of prices that have fallen nationwide on
average by more than a third. That could buy 40,000 to 80,000
properties, according to a recent report from Keefe Bruyette
& Woods. Of course, success is by no means assured for
private-equity firms, especially given their high targets for
investment returns in general and their lack of experience
with this type of real estate.”
Things
are
alive and well in the REIT biz. JAVELIN Mortgage Investment
Corporation (JMI) announced plans to raise $150 million
in its IPO and concurrent private placement. The company has
priced its initial public offering of 7,250,000 shares of
common stock at $20.00 per share, raising $145 million in
gross proceeds. “The Company intends to use the proceeds from
the offering and concurrent private placement to acquire its
target assets, which consist of residential mortgage-backed
securities issued or guaranteed by U.S. Government-sponsored
entities, residential mortgage-backed securities that are not
issued or guaranteed by U.S. Government-sponsored entities and
other mortgage-related investments.” New York Mortgage
Trust, Inc. recently announced an underwritten public
offering of 13.5 million shares to increase its liquidity.
“New York Mortgage expects to utilize the proceeds to acquire
certain assets of the company including agency residential
mortgage-backed securities (RMBS) and certain commercial
mortgage-backed securities collateralized by multi-family
loans.” Western Asset Mortgage Capital Corporation
announced that it closed a public offering of 13,800,000
shares of its common stock, including 1,800,000 shares
pursuant to an option that was fully exercised by the
underwriters, at a public offering price of $22.20 per share,
for total net proceeds of approximately $301 million after
deduction of underwriting discounts and commissions and
estimated expenses. “The Company intends to use the net
proceeds of the offering primarily to purchase Agency RMBS
(residential mortgage-backed securities for which the
principal and interest payments are guaranteed by a U.S.
Government agency or sponsored entity) and may, at
opportunistic times, also purchase its potential target
assets.”
Rates
go
up a little, down a little. Yup – hard to move much higher
with the Fed buying twice the daily production. But early on Wednesday 3%
securities (pretty much what rate sheets are tied to) were
worse versus Treasuries due to heavy originator supply. Huh?
The Federal Government will buy it! Traders reported that
early on that they had seen “very little buying outside of the
Federal Reserve in 3.0s.” Investors were spooked by the high
refinance numbers and prepayments – all they have to do is
call an originator, who will tell them that they are
refinancing the same borrower they refinanced six months
ago! Of course prepayments are going to be high.
Tradeweb
reported that originator selling was 136% of the 30-day moving
average for the dealers they track. By the end of the day
prices on 3s through 4s were down 4-6 ticks, or about .125,
and the 10-yr closed nearly unchanged at 1.62%.
But
that was yesterday – what about today and tomorrow? We have
Jobless Claims, which are expected to increase to 370k from
359k. At 10AM EST are Factory Orders for August, projected at
-5.8% from +2.4%, at 11AM next week’s Treasury auction amounts
are announced, and then, at 2PM EST the FOMC minutes hit. Eyes
will be focused on what happens on 1/1/13 when Twist ends –
will the Fed announce more asset purchases to keep the monthly
total at the present $85B pace? And what are the key “trigger
points” at which QE3 will be adjusted – is there a specific
unemployment rate Fed officials are coalescing around (i.e.
under 7% or above 9%)? In the early going rates are nearly
unchanged from Wednesday afternoon, which were pretty close
to Tuesday afternoon…
On the outskirts of a small town, there was a big, old pecan
tree just inside the cemetery fence. One day, two boys filled
up a bucketful of nuts and sat down by the tree, out of sight,
and began dividing the nuts.
"One for you, one for me, one for you, one for me," said one
boy. Several dropped and rolled down toward the fence.
Another boy came riding along the road on his bicycle. As he
passed, he thought he heard voices from inside the cemetery.
He slowed down to investigate. Sure enough, he heard, "One
for you, one for me, one for you, one for me..."
He just knew what it was. He jumped back on his bike and rode
off. Just around the bend he met an old man with a cane,
hobbling along.
"Come here quick," said the boy, "You won't believe what I
heard! Satan and the Lord are down at the cemetery dividing
up the souls!"
The man said, "Beat it kid, can't you see it's hard for me to
walk." When the boy insisted though, the man hobbled slowly
to the cemetery.
Standing by the fence they heard, "One for you, one for me.
One for you, one for me."
The old man whispered, "Boy, you've been tellin' me the
truth. Let's see if we can see the Lord...?"
Shaking with fear, they peered through the fence, yet were
still unable to see anything. The old man and the boy gripped
the wrought iron bars of the fence tighter and tighter as they
tried to get a glimpse of the Lord.
At last they heard, "One for you, one for me. That's all. Now
let's go get those nuts by the fence and we'll be done."
They say the old man had the lead for a good half-mile before
the kid on the bike passed him.
If
you're interested, visit my twice-a-month blog at the STRATMOR
Group web site located at www.stratmorgroup.com.
The current blog discusses the looming fiscal cliff brought on
by Washington DC. If you have both the time and
inclination, make a comment on what I have written, or on
other comments so that folks can learn what's going on out
there from the other readers.
